NEWARK, N.J. -- IDT Corp., which provides telecommunications and financial services through its IDT Telecom unit, said Tuesday that it will suspend its quarterly dividend for a year and instead pay a special dividend, because of uncertainty over the federal tax treatment of dividends.
IDT will suspend its regular quarterly dividend of 15 cents for the fiscal year ending July 13 of next year. Instead, it will pay a special dividend of 60 cents per share this year around Nov. 13 to shareholders of record as of Nov. 5.
The company said it is concerned about the tax treatment of dividends, including the scheduled expiration of the 15 percent federal tax rate on dividend income on Dec. 31.
For tax purposes IDT will treat the special dividend as a return of capital, not as a dividend.
"We do not expect to pay a regular dividend for the four quarters of fiscal year 2013, and we will monitor our operational results, cash needs and anticipated performance to determine the best way to deliver value to our stockholders going forward," said Howard Jonas, chairman and CEO.